No-fault Likely To Get One-year Extension

No Long-term Fix On Horizon Yet

Tallahassee — Struggling over how to improve Florida's no-fault auto insurance law, state legislators likely will park the issue for a year.

The Personal Injury Protection, or PIP, provision of the state's insurance code will expire next year if the Legislature fails to extend it. Drivers spend, on average, about $125 a year for $10,000 worth of coverage. Drivers statewide are required to carry the coverage that pays medical bills regardless of who's at fault in a crash.

Without it, medical costs from an auto accident are paid by an accident victim's own health insurance and victims would sue in court for other damages, such as lost wages.

Proponents of the PIP system argue it speeds up medical payments to accident victims, and keeps cases out of court. Critics claim Florida's no-fault system is rife with fraud, and that attorneys and medical clinics are seeing more benefits than accident victims.

Legislators have been lobbied heavily this year to do anything from outright killing the PIP provision to just making it harder for lawyers to sue insurers, or other steps to make it easier for doctors to collect payment for treating accident victims.

On Tuesday, the Senate Banking and Insurance Committee approved a bill that would largely ignore most of the demands.

The bill would re-enact PIP, but only for another year. That gives legislators another legislative session, after this year's elections, to deal with the issue. The delay also creates a reason for lobbyists for insurance companies, doctor groups, and trial lawyers to woo legislative support by spending heavily this fall on state political campaigns.

Committee Chairman Rudy Garcia, R-Miami, said Tuesday that it may be impossible for legislators this session to reach a compromise on an auto insurance bill that would satisfy consumers, insurers, doctors, and trial lawyers. He said an auto insurance fix is hindered this year by legislators' focus on repairing a homeowner insurance crisis that has resulted in skyrocketing rates after the past two hurricane seasons.

On Thursday, the House Insurance Committee will consider its own no-fault bill. Insurance lobbyists are not likely to support the House measure, either.

Gov. Jeb Bush has been reluctant to join in the debate, having refused to give legislators any direction on how to proceed.

Garcia blamed this year's tight legislative schedule, including a week of the session in which legislators will be absent to celebrate Easter and Passover religious holidays, for his committee's inability to deal with the issue.

Several Democrats on the committee -- including Sens. Skip Campbell of Tamarac, Steve Geller of Hallandale Beach and Les Miller of Tampa -- said during the meeting that they are angry that Senate Republican leaders aren't allowing them time to come up with a more consumer-friendly auto insurance bill this session.

Garcia insisted that the legislation being crafted is a good first step. It would require spending in the state budget that would give pay raises to each of the state's 122 insurance fraud investigators, hire at least 10 new investigators, and create an entirely new fraud unit.

"We are striking the right balance," Garcia said, noting that insurance investigators say they have the capability of investigating only about one-fourth of the complaints they receive about insurance fraud. "This bill [along with other related legislation] will reduce fraud and insurance costs."

Debate in the committee Tuesday, however, focused on a change that would prevent attorneys from collecting huge fees, or multiples of their ordinary fees, in certain no-fault auto insurance cases.

Sen. Bill Posey, R-Rockledge, questioned the wisdom of ending the possibility of those large attorney fees. He said they're needed in cases in which insurers have wrongfully delayed and denied payment of a proper claim.

"Occasionally, we will have some companies that can jerk [consumers] around and not pay their claims and that contingency multiplier can get [insurance companies] to respond," Posey said.

Several insurance industry lobbyists pointed Tuesday to a report released by the Insurance Research Council last month that showed costs of PIP claims for insurers jumped 24 percent in the past three years, more than twice the rate of inflation. They also said attorneys are involved in about 45 percent of all PIP claims, up from 32 percent of the cases in 1992.

The PIP system was designed to avoid so much legal fighting over auto insurance claims. Back in 1971, Florida became the second state in the nation to enact a no-fault insurance plan, hoping to reduce insurance costs and speed medical payments to accident victims. It is now one of 12 states with no-fault auto insurance.

Legislators are having trouble finding a no-fault fix, in part, because the insurance industry can't agree on what to do.

Some of the state's largest auto insurers, including State Farm, Allstate and Nationwide, are lobbying to abolish the PIP system. But smaller, Florida-based insurers that serve high-risk drivers say they'll be hurt if the state abandons no-fault coverage.

"The industry does not have consensus at all," said Sam Miller, executive vice president for the Florida Insurance Council. "... Everybody agrees that the current system is all messed up, that we are charging so much more for PIP than we should charge. It's money that, from our point of view, is being wasted."

Mark Hollis can be reached at mhollis@sun-sentinel.com or 850-224-6214.